I cannot even tell you the number of times I have heard the phrase “I am good” come from the mouths of folks, both in my inner circle and outside of it, when it comes to finances. It’s quite frightening and the reality of it is that most of us don’t even know what we don’t know when it comes to the topic of personal finance.

As I approach my fifth year in this industry, it is still crazy to me that all of those “smart” people at the state and national levels believe it is more important for us to be taught Calculus and Physics than it is to be able to choose our employer 401k investments and other benefits. I am very thankful for all of the educators in my life and the lessons they taught me to prepare me for adulthood, but even after effectively passing many of the advanced courses my high school and university had to offer I still had no idea what to select on my 401k paperwork when I was hired for my first real job! I remember staring at the paper wondering, “what in the world is the Vanguard Retirement 2050 Fund?”

Not only was I not sure what investment(s) was appropriate for me, but I also had no idea how much I could afford to start putting into this retirement account every pay. To be honest, as a young professional just staring out, I was not sure I could afford to put anything into it, as I was no longer living in my parent’s house and had too much month at the end of the money most of the time. The poor HR gal trying to walk me through the paperwork was doing her best to educate me in the five minutes we had allotted to fill out the paperwork, but needless to say, I walked out of there not sure what I had elected to do, nor did I have any idea what an employer match was!

“So……what’s your point?”

The above example may or may not seem extremely basic to you, but the truth is that most of us enter the workforce and adulthood with a minimal knowledge and understanding of finances and financial planning. Many of the awesome folks I have had the privilege of meeting during my handful of years in personal finance cannot answer many of the following questions:

• “Am I saving enough for short-term financial goals, like: buying a house, growing our
  family, etc.?”
• “Am I saving enough to meet my long-term retirement goals?” (So many people
  share with me that they want to retire early yet are not even saving 10% of their
  income! The math does not add up!)
• “Do I focus on saving/investing, or do I focus on paying down debt?”
• “Why does it feel like no matter how much money I make it still isn’t enough to pay
  the bills?”
• “Should I have chosen pre-tax or Roth contributions for my 401k account?”

So how do we find the information we need to educate ourselves on these planning topics? Well, this is no easy task either, as there are thousands of online “experts” in the financial realm that will gladly sell you their book or their proven budgeting and investing system! The reality of it is, that you need to be able to filter out the garbage from the valid resources, when it comes to personal finance and planning. I would also encourage you to find someone in the profession you trust to ask questions of and learn more from. That does not mean you have to go out and hire some fancy financial advisor and pay them big bucks to try to solve all your problems either. But just like anything else in life, if you do not have a plan or roadmap to guide you on the financial side of things, then you will just continue to wander day-to-day not making any changes or improvements.

What is a financial plan?

If you ask a hundred people what a financial plan is or means to them, you will get a hundred different responses. In fact, if you Google it you will see hundreds of thousands of pages and results on what a financial plan is or what it means to have one. But simplistically, a financial plan should be a living and breathing document with your financial goals outlines as well as the action items you will need to accomplish to achieve those goals.

For example, if you are 45 years old and wish to retire at 65, here are some pieces of the puzzle that you will need to know:

• How much money do you currently have saved in retirement accounts?
• What investment return do you expect to get on these accounts over the next 20 years
  prior to retirement? What return do you expect during the retirement years?
• What is your life expectancy? How long will you live into retirement and how long do
  you need the money to last you (and spouse if you have one)?
• How much of your monthly retirement expense will be covered by Social Security and
  pensions?

These are just a handful of the many pieces to the puzzle that have an impact on your financial plan. Some others to consider will be estimating the impact inflation will have on your plan, determining what your distribution strategy will be in retirement, the impact long-term care may have on your plan, etc. This can be overwhelming and a lot to take in for people, but developing a sound financial plan can assist in providing many of these answers and set the expectation for your monthly savings goal moving forward.

Now is the time!

Regardless of your age, there is no better time to begin putting a financial plan together for you and your family! Sure, it is a little more forgiving if you are off track in your 30’s and 40’s than it is if you are behind or just starting in your 50’s and 60’s, but that does not mean there isn’t hope either way. What I can share with you from my years of experience in this space, those people who have a plan are sleeping far better at night and at least know how big the hill is thatthey have to climb to reach their goal. Those very same people are working hard every month to make changes to their lifestyle that also positively impact their cash flow in order to increase what they are saving towards both short-term and long-term financial goals. There are a number of adjustments that can be made now and, in the future, to get you to where you want to be, but would not having a plan and knowing those details now be helpful?

Find a resource you trust and start having those conversations today around financial planning and what you plan looks like and needs to be a success!